In a dramatic development in the plan by the National Cyber Bureau and the Defense Ministry Defense Export Controls Agency (DECA) to institute supervision of cyber systems exports from Israel, Prime Minister Benjamin Netanyahu ordered that the continuation of procedures for drawing up the order be canceled.
Netanyahu's decision came after he adopted the recommendations by a recently formed team for consideration of aspects of the draft order and the effects of such an order on the Israeli cyber industry. The team members heard the views of the industrialists and cyber company heads, who expressed concern that implementing this order would have a negative impact on the development of the sector in Israel, lead to a brain drain, and divert planned investments in companies to countries not having regulation in this matter.
As a substitute for implementing a supervision order for cyber systems exports, the Prime Minister and National Cyber Bureau head Dr. Eviatar Matania decided that Israel would comply with the Wassenaar Arrangement on this question - an international convention adopted by Israel that regulates exports of dual-purpose developments - civilian developments that when adapted somewhat can be used for military and aggressive purposes. In principle, all of the world's countries supervise cyber systems exports on the basis of this convention.
Israel: The only one in the world
Some of the recent critics in the cyber industry of the proposed order stated that while all the world's countries were adhering to the Wassenaar Arrangement in cyber supervision, Israel was the only one in the world working on such an order enforcing regulation of a growing industrial sector.
Dozens of objections were submitted to the Ministry of Defense and the National Cyber Bureau in recent months by companies in the industry seeking to halt progress on the order. Among other things, these companies asserted that the order had been formulated too generally, and that there was no clarity concerning the circumstances in which a product would require authorization before it is exported. They further alleged that deals made by the companies would be delayed and jeopardized before being given the go-ahead by the state authorities.
A senior Prime Minister's Office official today said, "For the sake of maximum certainty and minimizing the regulatory burden, definitions clarifying the substance of supervision over the cyber industry will be issued, and a thorough assessment will be made of providing exemptions and concessions on the duty obtain a license according to the country that is the destination of the exports and the types of system, while continually monitoring developments in the Wassenaar Arrangement and the supervisory policy on cyber exports in other countries."
Under the Prime Minister's decision, DECA will supervise exports of cyber systems for security purposes, such as offensive and defensive cyber systems, while supervision of exports of cyber systems with a civilian character will be through a new authority to be established in the Ministry of Economy and Industry.
A senior National Cyber Bureau source said that in any case, supervision of security cyber systems would take place in only a few cases, and would not change the activity patterns for most of the cyber companies.
Published by Globes [online], Israel business news - www.globes-online.com - on April 19, 2016
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